Solana-based Magic Eden has become the latest NFT marketplace to switch to a royalty-free model, following in the footsteps of X2Y2 in August, albeit reluctantly.
Magic Eden has become the latest NFT marketplace to switch to a royalty-free model. Under the optional reward model, buyers have the power to determine the rewards they wish to contribute to an NFT project, which means there is a chance that some creators may not receive rewards when their artwork is sold.
On October 14, via mail NFT Market noted that the decision was made after “difficult thoughts and discussions with many creators” and came as “the market has been moving towards optional creator rewards for some time.”
NFT Market shared a chart showing that the cumulative number of wallets using royalty-free markets to buy or sell NFTs skyrocketed in late September.
A tweet posted by @MagicEden explains it further, “The market is moving towards optional royalties for a while. These charts (https://t.co/wxiU800l2P) show the accumulated portfolios that have used royalty-free markets to buy or sell NFTs.”
The Community Reacts
The move was met with divided opinions by the NFT community on Twitter, with some seeing the move as positive for the long-term health of the industry, while others described the copyright omission as “theft.”
Noted NFT artist Mike “Beeple” Winkleman noted to his 700,000 followers on October 15 via Twitter that while he doesn’t like what Magic Eden and others are doing, going from a seller fee to a buyer premium could be better for the industry in the long run
Another Twitter user named @CaptainFuego, behind Fuego Labs, told his nearly 10,000 followers that “fees are stupid and shouldn’t exist. I’m excited to see platforms take this approach.”
Others were more critical of the change. Broccoli DAO argued that “rewards are necessary in an immature ecosystem,” noting that according to their calculations they have already lost up to $27,000 in rewards for 0% purchases in other markets.
@BroccoliDAO tweeted that, “Following Magic Eden’s announcement that they will be making copyright optional, we have taken proactive steps to protect the integrity of our project. We have analyzed and determined how much we have lost from rewards for 0% purchases in other markets.”
Cozy the Caller, a self-proclaimed analyst, made a grim prediction to his 108,000 followers, stating that, “I see a scenario where Magic Eden hits 0% and loses market share to a market that imposes rewards in an innovative way.”
“Honestly unrealistic, I don’t know who advises Magic Eden, but imagine screwing up a billion dollar company. I see a scenario where Magic Eden goes to 0% and loses market share to a market that enforces author copyrights in an innovative way.”
Magic Eden’s Reply
Magic Eden said that the change was not taken lightly and that they were “actively trying to avoid this outcome and have spent the last few weeks exploring various alternatives.”
Magic Eden noted in their latest post that, “Unfortunately, the rewards are not applicable at the protocol level, so we had to adapt to changing market dynamics.”
In August, the X2Y2 NFT marketplace announced that they were introducing a similar option that allows buyers to set the royalty rate when purchasing NFTs.
The move did not appear to affect the use of the platform; according to NFTGo data, in the past three months, X2Y2’s transaction volume ranked first, ahead of OpenSea.
By Audy Castaneda
